"By a correspondent
KARACHI: JCR-VIS has assigned a medium to long-term rating of ‘A+’ with a ‘positive’ outlook, and short-term rating of A1+ to First Micro Finance Bank Limited (FMBL), said a press release on Monday.
The ratings incorporate the management’s expertise and the board’s commitment to the mandate of the bank.
It also features the operational and credit-monitoring experience that FMBL draws from the Aga Khan Fund for Economic Development, which is managing several institutions and micro-finance programmes in South Asia, Central Asia and Africa as well as from the Aga Khan Rural Support Programme (AKRSP) in Pakistan, allowing the bank to develop effective appraisal systems to mitigate the risks associated with micro finance. Strong capital base allows the bank to operate at a national level. JCR-VIS derives further comfort from the high level of liquidity reserves held currently.
Over the rating horizon, liquidity is likely to remain high in relation to obligations. The bank is at an early stage of business growth and lending from the AKRSP platform has been geographically concentrated. Adaptability to differing environments in terms of income sources of borrowers and general credit behaviour, will be established over a period of time.
Further, profitability would be contingent upon ability to maintain credit quality, particularly in view of the high overhead costs inherent in the micro-finance business.